Key Takeaways

  • Fees of 1% per annum versus 0.5% per annum may appear small, but compounded over a working life the difference can amount to tens of thousands of dollars in lost retirement savings.
  • The APRA annual performance test holds underperforming funds accountable, but fees are a separate issue members need to check themselves.
  • Many Australians are in higher-fee funds — older retail products or unconsolidated accounts — without realising better alternatives exist.
  • Checking your fund's total fee structure and comparing it to alternatives is one of the most valuable financial actions you can take this year.

The Silent Drain on Your Retirement

Of all the threats to a comfortable retirement, superannuation fees are perhaps the least visible. Unlike a market downturn — which appears starkly on a statement — fees are deducted quietly every year, often buried in product disclosure statements almost nobody reads. The regulatory environment has improved and the industry is more competitive than a decade ago, but meaningful variation remains. The gap between lowest-cost options and higher-fee alternatives is still consequential over a full working life.

What Super Fees Are You Actually Paying?

Super fees take several forms and the full cost is rarely obvious from a single number.

Administration fees cover record-keeping, communications, and compliance. Some funds charge a flat monthly amount; others charge a percentage of your balance; many charge both. A percentage-based fee grows in dollar terms as your balance grows.

Investment fees cover portfolio management costs and vary significantly by option. A passive index-tracking option typically costs far less than an actively managed option with unlisted infrastructure or private equity exposure.

Transaction costs — brokerage and bid-offer spreads on buying and selling assets — must be disclosed in the fund's product disclosure statement.

Insurance premiums are deducted directly from your super balance. Default cover for life and income protection can be valuable, but poorly structured or excessive cover quietly erodes your balance year after year.

Why the Percentage Points Matter

Compounding amplifies investment returns — and equally amplifies the cost of fees over time. Two members contributing identically and earning identical gross returns can arrive at retirement with materially different balances if their fee structures diverge by even half a percentage point. ASIC's MoneySmart calculators allow anyone to model this with their own figures. The test is whether any fee premium is delivering a benefit — superior net returns, unique asset class access, or meaningful advice services — that justifies the cost.

What the APRA Performance Test Does — and Doesn't — Cover

The "Your Future, Your Super" performance test benchmarks investment returns relative to set indices. Funds that underperform must notify members; consecutive failures result in closure to new members. But the test does not flag high fees as a standalone concern — a fund can pass while still charging more than comparable alternatives. Fee scrutiny and performance scrutiny are separate exercises members need to run independently.

How to Check Your Own Fees

Your annual super statement must disclose total fees deducted during the year — start there. Your fund's Product Disclosure Statement sets out the full schedule, and the ATO's free YourSuper comparison tool displays fees and returns across MySuper products side by side. When comparing, look at total fees — administration plus investment plus other costs — as a percentage of your balance. Well-run industry funds often sit below 0.85% per annum total. Fees consistently above 1% per annum on a straightforward option are worth questioning.

Common Situations Where Fees Are Higher Than Necessary

Members who changed jobs and never consolidated old accounts pay fixed fees on multiple small balances simultaneously. Members in legacy retail products often carry outdated fee structures. Members defaulted into actively managed options who have never reviewed their selection may be paying a premium not earned back in net returns. Consolidating accounts, switching fund, or simply changing investment option within your current fund are all practical responses — the right one depends on your situation.

When Higher Fees Can Be Justified

Not every premium fee is unjustified. Access to unlisted asset classes — infrastructure, private equity, private credit — genuinely adds diversification and return potential, but comes with higher management costs. The test remains consistent: is the fee premium delivering a measurable benefit that justifies the cost?